Medical district is broke, but medical services booming in area

Dean Olsen

Thursday

Apr 28, 2011 at 12:01 AMApr 28, 2011 at 10:26 AM

More than eight years after the Illinois General Assembly created a special district to help expand Springfield’s medical-services industry, not a single bricks-and-mortar project can be attributed to the district’s existence.

More than eight years after the Illinois General Assembly created a special district to help expand Springfield’s medical-services industry, not a single bricks-and-mortar project can be attributed to the district’s existence.

There are no permanent signs marking the district’s boundaries, and its all-volunteer commission is essentially broke, with $147.72 left in its checking account.

“Certainly, this has been discouraging, but there have been no solutions,” said Mikal Sutton, director of medical development for the Greater Springfield Chamber of Commerce.

In many ways, however, the situation is far from dismal in the Mid-Illinois Medical District.

The one-square-mile district is bounded by North Grand Avenue and by 11th, Walnut and Madison streets. It includes two hospitals, Southern Illinois University School of Medicine and outpatient clinics large and small. It also has dilapidated houses, vacant lots, well-maintained yards and immaculate homes.

Recession-proof?

Wednesday’s official kickoff of St. John’s Hospital’s $172.4 million renovation project — the costliest in hospital history— is only the latest positive development in the medical district.

Last summer, SIU opened its $21.5 million Simmons Cancer Institute, and the $25 million Kindred Hospital Springfield opened at 701 N. Walnut St., just west of the district, in December.

Memorial Medical Center’s $27 million Springfield Clinic 1st building opened immediately east of the hospital in 2006. The $14.6 million Prairie Diagnostic Center, owned jointly by St. John’s, Memorial and doctors from the Prairie Cardiovascular group, opened the same year.

Renovations and new construction have continued at Memorial, which has reported record-high revenues in recent years.

Even St. John’s, which has posted several annual losses, hasn’t let the economic downturn stop several smaller projects and the large-scale renovation, which will create new inpatient surgery areas and modernize four floors of the hospital’s 13-story patient-care tower along Ninth Street.

“The health-care sector, not only in our community but elsewhere, is somewhat‘recession-immune,” said Michael Boer, the banker and former economic-development executive who has been president of the medical district commission since its inception.

Yet Boer said he and others have been frustrated by the lack of ongoing funding for the district and lingering uncertainty about whether the Third Street railroad corridor will be developed for high-speed passenger trains and additional freight traffic.

Boer and other local officials want to see rail traffic moved off the Third Street corridor.

St. John’s chief executive Bob Ritz, a member of the medical district commission, remains optimistic about the district’s potential because it shows developers that health-care providers are willing to collaborate on a vision for the community.

“Everybody hears we have a medical district, and all of a sudden they expect immediate and spontaneous companies to roll into town,” Ritz said. “It doesn’t work that way.”

When the district was created, proponents of the district expected a steady stream of state funding to help the district hire a full-time staff that would market the district to the nation and world.

“Call us naïve,” Boer said.

The Springfield district is modeled after the booming Illinois Medical District on Chicago’s near-west side. That district, which bills itself as the nation’s first and largest, was formed in 1941 and received annual state funding until the middle of the past decade. Boer said state funding helped the Chicago district develop the intellectual and physical infrastructure to accommodate big growth, beginning in the 1980s, in medical services.

Springfield’s medical district commission, like its counterpart in Chicago, lacks the power to tax, but it can borrow money and acquire property to promote development of the district.

Staff needed

State budget shortages that began in the mid-2000s prevented local lawmakers from securing steady funding for Springfield’s district, said Sen. Larry Bomke, R-Springfield. Legislators haven’t given up the quest, but they don’t expect state money to be available this year.

A $300,000 state grant did pay for a master development plan for the district, which was completed in 2005. The grant also paid for a marketing plan, but only part of that has been carried out because of limited funds.

The commission receives help from Sutton, but Boer said the commission would have more flexibility to promote the district and confidentially negotiate with potential developers if the district were able to employ its own staff.

Despite the challenges, medical and social-service employment in Springfield has grown from 14,700 in 2003 to 17,100 in 2010. Health care generates almost $2.5 billion a year for the local economy, according to the chamber.

Work to assist the district continues.

The medical district commission is looking into the possibility of Springfield extending an enterprise zone into the district, which would give developers a break on construction costs, Sutton said.

A $176,600 state grant awarded to the commission for planning work on a regional health-information exchange has been spent, all except $147, which needs to be returned to the state, Sutton said. Howver, money is being sought to continue work on the exchange.

A recent bright spot for the district was the announcement of a $240,000 federal grant to pay for preliminary design of a proposed $42 million health-care training facility and business incubator somewhere in the district.

The grant represents only part of the $3.5 million in design work needed for the project, but Boer said the Chicago architectural firm of Loebl Schlossman & Hackl, which will begin the project May 1, will suggest future funding options.

Dean Olsen can be reached at 788-1543.

Medical district commission

Members of the Mid-Illinois Medical District’s 11-person commission are appointed by Springfield’s mayor, the governor and the Sangamon County Board chairman:

* Michael Boer, a mayoral appointee, is president and CEO of Warren-Boynton Financial Center.

* Rex Brown, a gubernatorial appointee, is president and CEO of Hillsboro Area Hospital.

* Virginia Cooper, a gubernatorial appointee, is senior associate general counsel at SIU School of Medicine.

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